Chapter 12, Problem 4COP

Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 20Y8, were as follows:

1. A. Issued 15,000 shares of $20 par common stock at $30, receiving cash.
2. B. Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash.
3. C. Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.
4. D. Declared a quarterly dividend of $0.50 per share on common stock and $ 1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding.
5. E. Paid the cash dividends declared in (D).
6. F. Purchased 8,000 shares of treasury common stock at $33 per share.
7. G. Declared a $ 1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued.
8. H. Paid the cash dividends to the preferred stockholders.
9. I. Sold, at $38 per share, 2,600 shares of treasury common stock purchased in (F).
10. J. Recorded the payment of semiannual interest on the bonds issued in (C) and the amortization of the premium for six months. The amortization is determined using the straight-line method.

Instructions

1. 1. Journalize the selected transactions.
2. 2. After all of the transactions for the year ended December 31, 20Y8, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data that follow were taken from the records of Equinox Products Inc.

Income statement data:
Advertising expense	$ 150,000
Cost of goods sold	3,700,000
Delivery expense	30,000
Depreciation expense—office buildings and equipment	30,000
Depreciation expense—store buildings and equipment	100,000
Income tax expense	140,500
Interest expense	21,000
Interest revenue	30,000
Miscellaneous administrative expense	7,500
Miscellaneous selling expense	14,000
Office rent expense	50,000
Office salaries expense	170,000
Office supplies expense	10,000
Sales	5,313,000
Sales commissions	185,000
Sales salaries expense	385,000
Store supplies expense	21,000
Retained earnings and balance sheet data:
Accounts payable	$ 194,300
Accounts receivable	545,000
Accumulated depreciation—office buildings and equipment	1,580,000
Accumulated depreciation—store buildings and equipment	4,126,000
Allowance for doubtful accounts	8,450
Bonds payable, 5%, due in 10 years	500,000
Cash	282,850
Common stock, $20 par (400,000 shares authorized; 100,000 shares issued, 94,600 outstanding)	2,000,000
Dividends:
Cash dividends for common stock	155,120
Cash dividends for preferred stock	100,000
Goodwill	700,000
Income tax payable	44,000
Interest receivable	1,200
Inventory (December 31, 20Y8),at lower of cost (FIFO) or market	778,000
Office buildings and equipment	4,320,000
Paid-in capital from sale of treasury stock	13,000
Excess of issue price over par—common stock	886,800
Excess of issue price over par—preferred stock	150,000
Preferred 5% stock, $80 par (30,000 shares authorized; 20,000 shares issued)	1,600,000
Premium on bonds payable	19,000
Prepaid expenses	27,400
Retained earnings, January 1, 20Y8	8,197,220
Store buildings and equipment	12,560,000
Treasury stock (5,400 shares of common stock at cost of
$33 per share)	178,200

A. Prepare a multiple-step income statement for the year ended December 31, 20Y8.

B. Prepare a retained earnings statement for the year ended December 31, 20Y8.

C. Prepare a balance sheet in report form as of December 31, 20Y8.